QBE is reviewing its Latin American operations and moving to simplify the group after flagging an expected after-tax loss of $US1.2 billion ($1.5 billion) for last year.

“We have some businesses with strong market positions that are performing well, but we also have businesses that are underperforming,” new CEO Pat Regan said.

“We have commenced a comprehensive program of work to improve both the level and consistency of performance.”

As reported in a Breaking News bulletin last week, QBE will take an impairment charge of about $US700 million ($875 million) on the carrying value of North American goodwill, reflecting an increase in the long-term combined operating ratio assumptions for the region in its updated business plans.

A cut in the US corporate tax rate to 21% has led to a $US230 million ($288 million) writedown on the carrying value of deferred tax assets.

The insurer expects to report an overall combined operating ratio of about 104% at its annual results on February 26, compared with a target range of 100-102% forecast in October.

“This has been a challenging year for QBE, reflecting an unprecedented cost of catastrophes as well as the particularly disappointing deterioration in our emerging markets business,” Mr Regan said.

Fourth-quarter events including Californian wildfires, storms last month in Australia and further impacts from Hurricane Maria added about $US130 million ($163 million) to the net cost of catastrophes.

After a detailed review of year-end claims reserves, QBE has strengthened provisions by about $US110 million ($138 million), mainly in North America and Asia-Pacific, also contributing to the combined operating ratio’s deterioration.

Mr Regan, who officially took over from John Neal this month after being named CEO in September, says he has been reviewing the group’s operations over the past few months.

Morningstar analysts say a sale of the Latin American operations is likely, while upside is expected from restructuring, stronger global economic conditions, pricing and higher long-term interest rates.

“Following the latest setback, it will be another 12 months to gain confidence that the firm can deliver consistent and good-quality earnings,” analyst David Ellis writes in a research note.

QBE has forecast a target combined operating ratio of 95-97.5% for this year and a target net investment return of about 2.5-3%.

Morgan Stanley analysts say the guidance is conservative and positions QBE to meet expectations.